Sydney Press Conference 03/03/21

03 March 2021

SUBJECT: National Accounts




SUBJECT: National Accounts.

JIM CHALMERS, SHADOW TREASURER: Quarterly growth with a three in front of it is welcome, but unsurprising. It's unsurprising because the economy's coming off such an extraordinarily low base in last year's recession. It's also unsurprising because so much of the story here is about the reopening of the Victorian economy. What we saw in Victoria, in this quarter, was really quite remarkable, in the sense that the reopening of the Victorian economy contributes so much of the growth to what we're seeing in today's numbers. 

The credit for this rebound goes to the Australian people. The Australian people who stuck together, and did the right thing by each other, to do their best to limit the spread of this virus, explains so much of what we're seeing in these welcome economic figures today. 
These numbers are good, but not good enough to recover all of the ground we lost in the recession. The economy is stronger, but not strong enough to create enough good, secure, well-paid jobs for more Australians. And yes, we're doing better than other countries, but our unemployment rate is still higher than in the US, and we lag badly when it comes to deploying the vaccine. Lagging on the vaccine, not getting the vaccine away as quickly as the government promised, will have economic consequences going forward. 

So we need a little bit of perspective here when it comes to these National Accounts. The economy is still smaller at the end of 2020 than it was at the beginning of last year. Business investment has recovered a little, but it's still 5% down on what it was pre-COVID, and 26% down on what this government inherited from Labor. When you look at the wages measure, average compensation per employee actually went backwards in the December quarter, and that is incredibly troubling, particularly when you consider the long term wage stagnation that has been the defining feature of the economy under this Liberal and National government.
There have been improvements in consumption, and in some industries, which, again, go to the reopening of the Victorian economy. When you look at accommodation and food, you look at arts and recreation, you look at some of those other industry breakouts, it's incredibly clear that the reopening of Victoria is such a big part of the story we're seeing today. Victorian household consumption was something like 10% higher in the quarter, Victorian state final demand is something like 49% of demand nationally. That goes to the contribution that Victoria, and the reopening of their economy, has made to these figures today.
The Treasurer’s smug, self-satisfied, sloganeering fails to mention that there are still two million Australians who can't find a job or can't find the hours that they need to support their loved ones. This Treasurer doesn't understand that what looks like a recovery on paper still feels like a recession for millions of Australians who are doing it tough. He just doesn't seem to get that there's still a lot of uncertainty, and a lot of insecurity, in the Australian economy. The Treasurer doesn't understand that millions of Australians haven't snapped back, haven’t bounced back, and haven't come back. That life is still very difficult in middle Australia, for millions of Australian working families. 

That’s why, when the Prime Minister and the Treasurer cut JobKeeper this month, it will have diabolical consequences for a lot of Australian workers. The Treasurer and Prime Minister's cuts to JobKeeper will really sting. Something like 1.3 million Australians are expected to be on JobKeeper at the moment, the Treasury says something like 100,000 of those will lose their job when JobKeeper is cut by this government towards the end of this month. What the Treasurer, and the Prime Minister, and this Morrison government, doesn't understand is the pain that that will inflict on too many Australians. 

The type of jobs that we create in this country going forward goes to the type of recovery that we can expect to see in this country. A recovery built on insecure work and stagnant wages is not the right kind of recovery that Australians desperately need and deserve. Australians have made all kinds of sacrifices, they've done the right thing by each other to limit the spread of this virus, the payoff for them cannot be eight more years of wage stagnation and job insecurity, like the last eight years have been under this government.
This is a government in crisis and ordinary Australians aren’t getting a look in. A government in crisis cannot give the attention that is necessary to stagnant wages and job insecurity, all of the defining features of this economy before COVID, which risk being the defining features of the economy after. A government in crisis cannot manage this economy, or this recovery, in the interests of Australian working families. 

The answer here to all of the challenges in our economy isn't more cuts to wages, cuts to super, or cuts to government support. It isn't taxpayer-funded executive bonuses, in a budget which is riddled with rorts. The answer here is investment in secure, well-paid jobs. Investment in cheaper and cleaner energy. Investment in aged care and childcare. Investment in training and apprenticeships. That's the right kind of recovery for this country. The government is taking us on a different path. It's a government in crisis, which is incapable of managing the economy in the interests of ordinary working people.
JOURNALIST: These figures are quite strong today. Is the economy turning around more quickly than you expected?
CHALMERS: Well, the rebound in quarterly economic growth is unsurprising given it's coming off a very low base and because this quarter included, largely, the reopening of the Victorian economy. We welcome a rebound in the economic growth numbers, but we need some perspective here. The economy is still smaller at the end of last year than it was at the beginning. We still have issues with wages, in particular, and insecure work. We still have historical issues with business investment and other factors in the economy. So, the government shouldn't be in a rush to deploy the usual smug, self-satisfied, slogans when it comes to the performance of the economy. The numbers are welcome today, but too many Australians are still struggling. And what we need to see here is not more cuts to wages, and super, and economic support, but more investment in the drivers of growth going forward.
JOURNALIST: Does the strength of the economy at the moment bolster the case for winding back economic stimulus?
CHALMERS: Well, for those 1.3 million Australians still on JobKeeper, the Prime Minister's cuts to that economic support will sting. The Treasury has said publicly that they expect something like 100,000 of those 1.3 million Australians on JobKeeper will lose their job when that vital economic support is cut. Nobody has said that JobKeeper should go on forever, or that it should be a permanent feature of the budget, but what we have said, and what many sectors around Australia, particularly those exposed to international border closures have said, is that JobKeeper should be tailored to the economic conditions. We recognise that the economy in aggregate is recovering. That's unsurprising, that's expected. It's time for the government to acknowledge that not all parts of the economy are recovering as fast as we would like. There is a case for tailored economic support to some parts of the economy which are still struggling, whether that be in Cairns or other parts of Australia, which are impacted by those international border closures.
JOURNALIST: With the parts of the economy rebounding, do you think the government is in a position to consider an aged care levy in the May budget?
CHALMERS: Well, I think the Royal Commission is a real wake up call for this government. It is evidence of the consequences of the $1.7 billion that Scott Morrison pulled out of aged care in the budget. It's a reminder, not that we should need one, that Australians, and particularly older Australians, need and deserve a much better standard of care than they've been receiving. And the Royal Commission told the story of some horrific outcomes in aged care. Maggots in wounds, undernourished older Australians. So, the case for change in aged care is there. Clearly, that comes with a hefty price tag. It's up to the government to respond to the recommendations made by the Royal Commission as it relates to funding. We’ll play a constructive role in that. We'll have all of the discussions that you would expect from us. All of the consultation. We all have an interest, as Australians, in properly resourcing and properly funding aged care. Let's see how the government responds, and we'll make our views clear as well.
JOURNALIST: And just lastly, when should the Reserve Bank consider lifting the cash rate?
CHALMERS: The Reserve Bank has made it clear that they expect rates to be low for some time and they expect to be supporting the economy for some time. It's really important that nobody gets carried away by one quarterly figure or another, which doesn't explain the whole story of what's going on in the economy. The Reserve Bank has pointed out that we have an enduring issue with stagnant wages, we have an enduring issue with underemployment and insecure work. And these issues won't go away immediately, they've been building for the entire life of this Liberal National government. So, whether it's the Reserve Bank, or the government, it's crucial that we don't declare victory over this recession too early. There are people still struggling. There are industries, and towns, and small businesses, and workers, who require ongoing support. Whether that's monetary policy support or fiscal policy support. Thanks very much.